Final answer:
A profit-maximizing monopolist will set output where marginal revenue equals marginal cost, represented by MR = MC. This point is where the two curves intersect on a graph. In perfect competition, profit maximization occurs where market price equals marginal cost.
Step-by-step explanation:
A profit-maximizing monopolist will produce the level of output at which marginal revenue (MR) is equal to marginal cost (MC). This rule is based on the practice of increasing output as long as marginal revenue exceeds marginal cost and reducing output when marginal cost exceeds marginal revenue. This point of equality between MR and MC can be easily identified on a graph where the two curves intersect, and, importantly, it doesn't require calculations of total revenue or total cost to be determined.
In the context of perfect competition, a firm maximizes profits where the market price (P), which equals marginal revenue, is equal to marginal cost. Whether this profit maximization results in actual economic profits depends on the relationship between the market price and the firm's average total cost at the profit-maximizing output level.